FalconStor Software, Inc. Under Long Term Investor Investigation

If you are a current long term investor in FalconStor Software, Inc. (NASDAQ:FALC) common stock, including those who purchased also prior to February 2009 and presently continue to hold those shares, you have certain options and you should contact the Shareholders Foundation, Inc.

To have your information reviewed for options and to recieve notifications about this investigation, please use this form. You may also send an email to mail@shareholdersfoundation.com, or call us at (858) 779-1554.
Company Name(s): 
FalconStor Software
Affected Securities: 
NASDAQ: FALC

A lawsuit on behalf of investors in FalconStor Software who purchased COCO shares during the period between February 5, 2009 and September 29, 2010alleging securities laws violations by FalconStor Software, Inc. was filed earlier this month. Meanwhile an investigation on behalf of current long term investors in FalconStor Software, Inc. (NASDAQ:FALC), including those who purchased also prior to February 2009 and presently continue to hold those FALC shares, over possible breaches of fiduciary duty was announced.

According to the complaint filed in the United States District Court for the Eastern District of New York the plaintiff alleges on behalf of those who purchased FalconStor Software, Inc. (NASDAQ:FALC) common stock during the period between February 5, 2009 and September 29, 2010 that FalconStor Software violated the Securities Exchange Act of 1934 by issuing between February 5, 2009 and September 29, 2010 materially false and misleading statements regarding FalconStor’s business and its prospects.

The investigation by a law firm on behalf of current FalconStor Software long term investors, including those who purchased also prior to February 2009 and presently continue to hold those FALC shares, focuses on potential breaches of fiduciary duty by certain officers and directors of FalconStor Software, Inc. in connection with the alleged securities laws violations.

FalconStor Software, Inc. reported an increase in its 12 month revenue from $55.06million in 2006 to $89.46million in 2009. Nevertheless its Net Income for the same time periods stayed at a Net Loss of $3.38million, respectively $3.09million in 2009. Shares of FalconStor Software, Inc. (NASDAQ:FALC) traded during 2006 at almost $10 per share. During 2007 FALC shares reached its all time high of $13.95 per share, before declined in 2008 to as low as $2.15 per share. During 2009 FALC shares were able to regain value and reached over $5 per share. Its current 52weekHigh was at $5 per share.

Then on September 29, 2010, FalconStor Software, Inc disclosed that its President, CEO and Chairman of the Board, ReiJane Huai, resigned from all of his positions with FalconStor Software, effective immediately. According to the company's statement, "Mr. Huai tendered his resignation following his disclosure that certain improper payments were allegedly made in connection with the Company's contract with one customer. The Company has fully cooperated with law enforcement authorities with respect to the ongoing investigation, and it will continue to do so. In addition, a special committee of the Board has been formed to conduct a full internal investigation of these matters and the special committee has retained counsel to assist it in its investigation." Shares of FalconStor Software, Inc. (NASDAQ:FALC) declined following the announcement from $3.98 per share to $2.64 per share, almost the lowest trading price during 2008 or almost 34% decline during September 29, 2010. FALC shares were able to regain value and recently traded at $3.14 per share.